Japanese credit rating agency raises India’s sovereign rating to BBB+ and stable, third upgrade this year
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New Delhi, Sep 19 : The government on Friday welcomed the decision by the Japanese credit rating agency, Rating and Investment Information, Inc (R&I), to upgrade India’s long-term sovereign credit rating to "BBB " from "BBB", while retaining the "Stable" outlook for the Indian economy.
The Japanese rating agency praised the policies of the administration of Prime Minister Narendra Modi aimed mainly at attracting foreign manufacturers to India, developing infrastructure, institutionalising the legal framework to improve the business environment, reducing the reliance on energy imports and ensuring economic security.
The rating agency further said that while the government has been increasing capital expenditures, "it has managed to reduce the fiscal deficit thanks to the tax revenue increase backed by the strong domestic demand as well as the cut of subsidies".
This is the third such upgrade by a sovereign credit rating agency this year, following S&P’s upgrade to "BBB" (from "BBB-") in August 2025 and Morningstar DBRS’ upgrade to "BBB" (from "BBB (low)") in May 2025 -- reaffirming India’s position as one of the most dynamic and resilient major economies in the world.
As per R&I’s India sovereign rating review, the upgrade is supported by India’s position as one of the world’s largest and fastest-growing economies, underpinned by its demographic dividend, robust domestic demand, and sound government policies.
R&I in its report recognised the progress in fiscal consolidation by the government, driven by buoyant tax revenues and rationalisation of subsidies, and a manageable level of debt, along with high growth.
It also highlighted India’s strengthened external stability, reflected in a modest current account deficit, stable surpluses in services and remittances, a low external debt-to-GDP ratio, and sufficient forex cover.
The recent increase in US tariffs was acknowledged as a risk factor by the agency.
However, it observed that India’s limited reliance on US exports and its domestic demand-driven growth model will contain the impact.
Further, it observed that while the GST rationalisation will result in revenue losses, the negative impact will likely be offset to some extent by the stimulation of private consumption.
The rating upgrade also underscores global confidence in India’s medium-term growth prospects amid prevailing global uncertainties.
The Japanese rating agency praised the policies of the administration of Prime Minister Narendra Modi aimed mainly at attracting foreign manufacturers to India, developing infrastructure, institutionalising the legal framework to improve the business environment, reducing the reliance on energy imports and ensuring economic security.
The rating agency further said that while the government has been increasing capital expenditures, "it has managed to reduce the fiscal deficit thanks to the tax revenue increase backed by the strong domestic demand as well as the cut of subsidies".
This is the third such upgrade by a sovereign credit rating agency this year, following S&P’s upgrade to "BBB" (from "BBB-") in August 2025 and Morningstar DBRS’ upgrade to "BBB" (from "BBB (low)") in May 2025 -- reaffirming India’s position as one of the most dynamic and resilient major economies in the world.
As per R&I’s India sovereign rating review, the upgrade is supported by India’s position as one of the world’s largest and fastest-growing economies, underpinned by its demographic dividend, robust domestic demand, and sound government policies.
R&I in its report recognised the progress in fiscal consolidation by the government, driven by buoyant tax revenues and rationalisation of subsidies, and a manageable level of debt, along with high growth.
It also highlighted India’s strengthened external stability, reflected in a modest current account deficit, stable surpluses in services and remittances, a low external debt-to-GDP ratio, and sufficient forex cover.
The recent increase in US tariffs was acknowledged as a risk factor by the agency.
However, it observed that India’s limited reliance on US exports and its domestic demand-driven growth model will contain the impact.
Further, it observed that while the GST rationalisation will result in revenue losses, the negative impact will likely be offset to some extent by the stimulation of private consumption.
The rating upgrade also underscores global confidence in India’s medium-term growth prospects amid prevailing global uncertainties.
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